According to media reports, Guangdong province has taken the lead in becoming the pioneer of low-carbon practices in China. Guangdong is one of 13 pilot regions—including five provinces and eight municipalities—that the Chinese government has selected to explore low-carbon development. So far, it is the only pilot region that has issued a comprehensive plan for this development and had it approved by the central government.

Explore new mechanisms and/or institutions for low-carbon development; and

Establish a full-fledged support system for these low-carbon activities.

Although the details remain vague, these actions appear to be headed in the right direction. Meanwhile, the goals of Guangdong’s low-carbon plan are very much in line with the central government’s plan: to reduce “carbon intensity” (carbon dioxide emissions per unit of gross domestic product) 19.5 percent by 2015, relative to the 2010 level; and to reduce carbon intensity more than 45 percent by 2020, relative to 2005 levels.

It’s worth noting that Guangdong’s 2015 carbon intensity goal is by far the most ambitious regional or municipal goal across China, surpassing the national average by 2.5 percentage points. The province’s 2020 goal also reflects the higher end of the national target, which is set to achieve a 40 to 45 percent decrease in carbon intensity between 2005 and 2020.

Yet while these goals may look impressive on paper, what really matters are concrete actions. Can the province deliver what it has promised? After all, recent records show that the national government has failed to meet its most high-profile targets: in early 2011, the government admitted that China achieved only a 19.1 percent reduction in energy intensity during the 11th Five-Year Period (2006–10), falling short of its 20 percent goal. And in March 2012, NDRC Chairman Zhang Ping, announced that energy intensity dropped only about 2.01 percent in 2011, failing to meet the 3.5 percent annual target. The national reduction in carbon intensity was even worse, according to Zhang.

On the one hand, these shortcomings indicate that China may face unprecedented challenges in pursuing low-carbon growth. On the other hand, they highlight the need for bolder, more ambitious measures, which is exactly what Guangdong province is attempting to do.

While the national goal for climate change mitigation remains locked on reducing carbon intensity, Guangdong is proposing an absolute cap on carbon dioxide emissions. Provincial officials have indicated that Guangdong may limit its 2015 CO2 emissions to around 630 million metric tons, which would allow only 120 million tons of incremental gain relative to the province’s 2010 base of 510 million tons. For a province with China’s fastest growing economy, this is indeed a bold move.

The provincial government has recognized that these emissions cuts will not be easy. A large share of the reductions will have to come from sectoral adjustments to the economy. The province hopes to maintain high economic growth and simultaneously reduce emissions by enhancing its service sector. Guangdong has set a goal to increase the service sector’s share of regional economic output from 45.2 percent currently to more than 48 percent by 2015.

Perhaps the most bold and interesting action, however, is Guangdong’s decision to initiate a province-wide carbon emission trading system by as early as 2013. Guangdong is one of only seven regions—two provinces and five municipalities—that the Chinese government has selected to experiment with an emissions trading scheme. While the other pilot jurisdictions are still struggling to grasp the concept and functions of emissions trading, Guangdong has, quite impressively, set a high bar for itself.

Step 1: Launch a voluntary trading platform and use the voluntary practice as a base to nurture institutions needed for a full-fledged cap and trade scheme.

Step 2: Build on the voluntary trading platform to explore the mechanisms of and solutions to the more detailed system design, such as the distribution allowance and sectors to be covered. Meanwhile, begin to explore the institutional designs needed for inter-provincial carbon emissions trading.

Again, questions remain about implementation and actualization, but Guangdong’s plan indicates that the province is at least serious about making emissions trading work. Moreover, the plan does well to include inter-provincial trading, which is essential if China hopes to scale-up these regionally based trading schemes to a national level.

In the future, let’s hope that Guangdong provides greater tranparency about its low-carbon development strategy, and especially about its plans to address some of the major challenges facing Chinese efforts at emissions trading. For example, a science-based emissions monitoring and statistical system that is “measurable, reportable, and verifiable” to outsiders is indispensable if China is to develop a credible trading system. Based on our previous observation, such a reliable MRV system has yet to be seen, and it may cause serious problems if China rushes into emissions trading without one. Our fingers are crossed that Guangdong will successfully address this issue.